2016 Looks to Be a Transition Year for Texas Land Markets

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Since 2010, all segments of Texas land markets have prospered with rising prices and increasing interest. Preliminary year-end results indicate that 2015 Texas land markets continued past trend of annual gains with a statewide price of $2,423 per acre, a solid three percent increase from 2014 prices. Since the six percent decline in 2009, Texas markets have posted a 36 percent increase returning a 6.2 percent annual compound rate of growth. However, the year-end results nearly match the third quarter, topping the third quarter price by a single dollar. That suggests that fourth quarter markets failed to increase at all. The 109-acre typical size indicates that the 4,959 sales included more small transactions than the 2014 market when typical size weighed in at 118 acres per transaction. The 2015 volume was the most activity since 2006.

The statewide increase ended the year on a positive note. However, some regional market results bucked the upward trend. Reflecting deteriorating profitability in commodity production, the once white-hot market for cropland appears to have cooled amid the new reality of falling corn and cotton prices. Areas dominated by cropland agriculture likely experienced some pushback as farmers and investors reevaluated the future of commodity prices. In addition, falling oil prices finally began to take a toll on demand in South Texas as market participants began to anticipate a prolonged period of low oil prices. Consequently, prices ebbed in both the Panhandle and High Plains as well as in the South Texas brush country.

Strong recreational demand continued to support rising prices in most of the state, leading to the overall increase.